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- 1. WS Atkins plcHalf year results for the six months ended30 September 201117 November 2011
2. Uwe KruegerChief Executive 3. Solid half year performance inchallenging markets Underlying operating profit up 7% on revenue up 27% followingNorth American acquisition North American acquisition integration progressing well withconsultancy business margin improved by 100bps Diversification now delivering more than 50% of Group revenue fromoutside the UK segment Good asset performance contributing to IAS19 post-tax pensiondeficit reduction of 43m to 206m Net funds at 30 September 2011 of 96m Overall outlook for the full year unchanged 3 4. Heath DrewettGroup Finance Director 5. Financial summarySolid half year performance in challenging markets30 Sep 2011 30 Sep 2010 Revenue 842.9 m 664.2 m 27 % Operating profit49.3m 45.3m 9% Operating margin 5.8 %6.8 % (100)bp Underlying operating profit 51.5m 48.3m 7% Underlying operating margin6.1 %7.3 % (120)bp Underlying profit before tax46.4m 41.7m11 % Underlying fully diluted eps36.2 p32.5p11 % Dividend per share 9.75 p 9.50 p3% Work in hand 88 % 88 %Good Average Staff numbers17,52915,470 13 %30 Sep 201131 Mar 2011 Staff numbers17,71017,522 1% Net funds 95.6m 123.3 m 5Note: Underlying figures exclude PBSJ transaction costs in 2010 and acquired intangible amortisation in connection with PBSJ transaction in 2011 6. Profit bridgeProfit before tax1.5 (2.2) 3.23.038.741.7 46.4 44.2Sep 2010 Transaction Underlying Operating Other Underlying Acquired Sep 2011reportedcosts2010profit 2011intangiblereported amortisation 6 7. Segmental summarySix months ended 30 September 2011OperatingOperatingm Revenue profit/(loss)marginUK420.4 24.65.9 %North America 226.0 11.75.2 %Middle East78.2 7.810.0 %Asia Pacific and Europe78.4 3.9 5.0 %Energy 58.2 4.3 7.4 %Total for segments861.2 52.36.1 %Joint Ventures included above (18.3) (0.8)Total before unallocated items842.9 51.56.1 %Unallocated amortisation of acquired intangibles-(2.2)Total for Group 842.9 49.35.8 % 7 8. UKOngoing market challenges30 Sep 2011 30 Sep 2010Revenue(m) 420.4 454.7(8)%Operating profit (m)24.630.9 (20)%Operating margin5.9 % 6.8 % (90)bpWork in hand 92 %89 % GoodAverage staff numbers 9,44910,327(9)%30 Sep 2011 31 Mar 2011Staff numbers 9,403 9,640(2)% Delays in project awards in Rail impact on margin in H1 and into H2 Staff numbers stable with minor reductions in Highways & Transportation Disposal of Asset Management business (550 people) announced 8 9. North AmericaStrong margin progression in consultancy30 Sep 2011 30 Sep 2010Revenue(m)226.0 27.5Operating profit (m) 11.71.6Operating margin 5.2% 5.8 % (60)bpWork in hand83%90 % GoodAverage staff numbers 3,352 49730 Sep 2011 31 Mar 2011Staff numbers 3,349 3,336 0.4 % Good six months results from consultancy Peter Brown issues being addressed Stable staff numbers and good work in hand 9 10. North America analysisConsultancy margin up 100bps to 6.8%6 months to 30 Sep 2011Revenue Operating profit MarginFaithful+Gould 26.1 1.2 4.6 %Consultancy 151.110.3 6.8 %Peter Brown48.8 0.2 0.4 %Total 226.011.7 5.2 %6 months to 31 Mar 2011Revenue Operating profit MarginFaithful+Gould 26.3 1.9 7.2 %Consultancy 155.4 9.0 5.8 %Peter Brown70.0 1.3 1.8 %Total 251.712.2 4.8 % 10 11. Middle EastReturn to growth30 Sep 2011 30 Sep 2010Revenue(m)78.270.5 11 %Operating profit (m) 7.8 8.1(4)%Operating margin 10.0 %11.5 % (150)bpWork in hand 91 %88 % Very goodAverage staff numbers1,6401,678(2)%30 Sep 2011 31 Mar 2011Staff numbers1,7701,555 14 % Growth in staff numbers reflecting increased activity and opportunity Investment for growth offset by further debt recovery Ongoing challenges of pace, scale and complexity11 12. Asia Pacific and EuropeImproved business 30 Sep 2011 30 Sep 2010Revenue(m) 78.473.47%Operating profit (m)3.9 4.0(3)%Operating margin 5.0 % 5.4 %(40)bpWork in hand91 %88 % Very goodAverage staff numbers1,960 1,9321% 30 Sep 2011 31 Mar 2011Staff numbers2,010 1,9264% Hong Kong and China growing Scandinavia performing well Mixed performance elsewhere due to difficult economic conditions 12 13. EnergyContinuing to invest 30 Sep 2011 30 Sep 2010Revenue(m) 58.247.722 %Operating profit (m)4.3 4.0 8%Operating margin 7.4 % 8.4 % (100)bpWork in hand76 %80 %GoodAverage staff numbers 1,056970 9% 30 Sep 2011 31 Mar 2011Staff numbers 1,10899312 % Margin reflects continuing investment Completed oil and gas acquisition in June (130 people) Outlook remains very good 13 14. Cash flowCash flow from operating activitiesm30 Sep 201130 Sep 2010Operating profit49.3 45.3Depreciation/amortisation 12.89.0Working capital(37.3) (29.9)Pension(14.0) (16.0)Provisions/other 2.11.8Cash flow from operating activities 12.9 10.2 Working capital outflow in first half as anticipated Pension contributions in accordance with agreed 2010 funding plan Net funds 95.6m (March 2011: 123.3m) 14 15. Working capitalSeasonal and structural working capital outflowm30 Sep 2011 31 Mar 2011D Trade receivables 278.9 283.1 Amounts recoverable on contracts116.598.2 Fees invoiced in advance (187.5) (169.6)Lockup 207.9 211.73.8Other receivables/prepayments 64.552.3(12.2)Trade payables (88.9)(96.9)(8.0)Other payables/accruals (240.3) (254.9) (14.6)Inventories/other(6.3)Movement in working capital (37.3) 15 16. PensionReduced IAS19 deficit IAS 19 deficit net of deferredIAS19 Deficit net of Deferred Tax (m)tax at 30 September 2011 400206m (March 2011: 249m) 350 Decrease driven by 300combination of asset 250performance and lower200inflation150 Collective consultation100concluded with respect to50proposals to remove final 0 SepMarSepMarSepMarSepMarSepsalary link2007 2008 2008 2009 2009 2010 2010 2011 2011 Enhanced Transfer Valueexercise in progress16 17. OutlookSolid half year performance in challenging marketsDiversified portfolio with good work in handOverall outlook for the year remains unchanged 17 18. Uwe KruegerChief Executive 19. Context Actions ExamplesPre-emptive Active deployment of staff repositioningUK Recruitment in growth opportunitiesto address ongoing market challenges Driving Bangalore operations to deliver competitive cost base Integration of North American acquisitionNorthMargin improvement as Stable staff numbers Americaa platform for growth Margin improvement initiatives taking effect Geographic expansion Adding skills to address buoyant infrastructure marketMiddleand sector Establishment of Saudi Arabian joint venture East diversification Headcount growing through 2011/12 Bridge engineering acquisition in DenmarkAsia Pacific Improving quality New architectural practice established in Chinaand Europe and margin Acquisition of mechanical and electrical skills in Hong Kong Nuclear JV with AssystemEnergyInvesting for growth TSS acquisition in Scotland Recent Pyry acquisition in oil and gas19 20. We address a portfolio of relatedsectorsINFRASTRUCTURE INDUSTRIAL WATER AND AEROSPACE, DEFENCE TRANSPORT BUILDINGS ENERGYENVIRONMENT AND SECURITYCOMMERCIAL AND RAIL WATERAEROSPACE NUCLEARRESIDENTIAL BUILDINGSROADSEDUCATION ENVIRONMENTDEFENCE OIL AND GAS AVIATION TOURISM AND LEISURE MARINE AND COASTALSECURITYPOWER INFORMATION MASS TRANSIT URBAN DEVELOPMENT RENEWABLES COMMUNICATIONS20 21. Our strategyFocus on core growth sectorsin engineering and design 21 22. Our strategy has three elementsOperational excellence Our prime focus Actions to deliver resilient results in challenging economic conditionsPortfolio optimisation Proactively managing the composition of the Group Exit of Asset ManagementSector focus Organic growth and acquisitions in sector focus areas Sectors include Energy, Aerospace, Security, Water22 23. Our first priority is operationalexcellenceOptimising financial delivery as well as technical excellencein areas where we have a defined competitive advantageUtilisation Operating margins Cash generation Organic growthWe are stepping up action to ensure we are well preparedfor the challenging environment23 24. We continue to review the portfolio Sale of UK Asset Management business for a cashconsideration of 5 million payable on completion,together with a deferred conditional amount of 0.5 millionRationale Outside core engineering and design disciplines Low marginThe divestment of our Asset Management business is astep towards focusing the Group on higher growth, highermargin activities24 25. We have clear growth sectorsIncreasing demand + ageing infrastructure + climate change imperative =Energyincreased investment in new and existing assetsIncreasing demand + high fuel costs + carbon emissions pressure =Aerospace investment in development of new technologiesGrowing threat environment + increasing use of technology =Securityincreased investment to secure both physical and information assetsPopulation growth + ageing infrastructure + resource scarcity =Water increased demand for comprehensive resource management strategiesMainly industrial focus with significantprivate sector client base25 26. We will direct resources to thesesectorsFocus on markets where double digitEnergygrowth and margins are achievable andsustainableAerospace Redirect and leverage resources andtechnical capabilitiesConsider acquisitions to supplementSecurityorganic growth as we balance our clientand sector mixWater Expand our market facing offering inareas where we already have apresence e.g. North America and India26 27. Our overall objective is value creationDrive margins >8%+ Reduce dependence on UK (long term aspiration 1yr assets< 1yr> 1yr< 1yr> 1yrOperating profit49.349.3Depreciation/amortisation 12.812.8Working capital(37.3)(37.3)Pension(14.0)(14.0)Provisions / other 2.1 2.1Cashflow from operating activities12.912.9Net interest 0.6 0.6Tax (1.8) (1.8)Net capital expenditure (5.5) (5.5) 6.2 6.2Acquisitions / disposals (13.6)(13.6)Dividends(19.2)(19.2)Net cash flow(26.6)(26.6)Non-operating itemsForeign Exchange1.3 (2.8) (5.5) EBT share purchase (4.0)Financing - IFinan